Generac shares jumped about 40% in after-hours trading Wednesday after Amazon signed a long-term deal to buy $2.4 billion of backup generators for its data centers.
Key Points:
- Generac will supply backup generators for Amazon data centers, with initial deliveries of $2.4 billion expected in 2027 and 2028.
- Amazon received a warrant for up to 1.69 million Generac shares that vests as its generator payments climb toward $8 billion.
- Cantor Fitzgerald and Barclays both left their ratings on the stock unchanged after the announcement.
Generac Amazon Generator Deal
Generac disclosed the agreement in a Sept. 16 securities filing, which shows it also issued a warrant to an Amazon subsidiary covering up to 1,693,745 shares.
The exercise price of $200.93 sits roughly 15% above the $175.11 close that day, so the position pays off only if the stock keeps climbing. About 307,954 shares vested at once.
The rest vest in tranches as Amazon's payments for the generators add up, to a ceiling of $8 billion in gross payments over the life of the arrangement. Generac can settle in cash or in shares before Sept. 16, 2033.
The full stake would be worth about $340 million, or nearly 3% of Generac's outstanding shares, against a market value of roughly $10.3 billion. Then the stock soared. Neither company has said how the $2.4 billion splits between the two delivery years, or what margins the work carries.
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Cantor, Barclays Weigh Generac
Cantor Fitzgerald kept its Overweight rating and $333 price target, calling the pact the most important data center news in the company's history. The firm said it also eases worries about the 2028 order book.
Barclays reiterated an Equalweight rating and a $278 target, noting the warrant covers about 2.6% of fully diluted shares. Consensus on the stock sits at Moderate Buy, with 12 buy ratings and five holds. The generator maker beat profit forecasts in the second quarter, reporting adjusted earnings of $2.91 a share against the $2.00 analysts expected.
Generac Data Center Pivot
Generac counted a $1.6 billion data center backlog at the end of that quarter, including roughly $1 billion booked in the prior 90 days. Data center revenue topped $100 million in the three months, and the Wisconsin company has guided to nearly $450 million for the full year, out of total net sales of $1.17 billion in the quarter.
Amazon becomes its second named hyperscale customer, and the latest supplier to take equity alongside an order from a buyer that raised 2026 capital spending guidance to about $220 billion in July. The retailer took warrants for as much as $4 billion of Qualcomm stock last week, as part of a deal to use that company's custom AI chips. Its cloud unit signed a $38 billion contract with OpenAI in November, a month after opening an $11 billion campus for Anthropic.
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